November 8 2013

Unemployment Numbers: The Good, the Bad, and the Ugly

Hadley Heath

The October jobs report is out. While the economy added over 200,000 jobs, the unemployment rate changed little. What's the story behind these numbers?  

Let's start with the good news.

Of the 204,000 jobs added, many were in leisure and hospitality (53,000) and retail (44,000). Look for those industries to continue to add jobs thoroughout the rest of the year. Black Friday sales and the Christmas holidays require a lot more help in stores, so there should be a lot of opportunities (even if they are short-term) available. Also, the jobs numbers from August and September were adjusted upward by about 60,000 jobs.

Another nugget of good news from the report: "There were no discernible impacts of the partial federal government shutdown on the estimates of employment, hours, and earnings from the establishment survey."

Now, for some bad news: The unemployment rate ticked up from 7.2 percent in September to 7.3 percent. Other indicators, like the average workweek (34.4 hours) and average hourly earnings ($24.10) didn't change much at all. (Average earnings rose 2 cents.)

But the really bad news, the "ugly" is that in October the labor force shrunk by 720,000.  This brings the labor force participation rate down to 62.8. According to the AP, this is a 35-year low.

We continue to struggle to accommodate 8.1 million "underemployed" (part-time workers who would prefer to be full-time) and 815,000 discouraged workers (who have looked for work in the past 12 months, but not lately because they believe no jobs are available).

It's good news to hear that the economy added 204,000 jobs last month, and the autumn trend of adding about this many jobs consistently in the past three months is undeniably good. Economic growth is increasing as well, up from 2.5 percent in the previous quarter to 2.8 percent now. But our economic problems run deep. The real question is this: Are these trends sustainable?  We need to see consistently vibrant hiring and growth in order to put millions of Americans back to work. 

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